The Connecticut Housing Finance Authority plans to sell $150 million of mortgage finance program bonds, starting with a retail order day on Monday.
Bank of America Merrill Lynch is the lead manager.
Proceeds from the authority's first bond deal of the year will finance more than 900 mortgages for first-time homebuyers, said vice president for finance Hazim Taib. According to Taib, the authority may move up the sale to one day only if it is oversubscribed.
"It is a good time to sell bonds now as there is a perceived risk — by investors — in the equity market and elsewhere, so the demand is high for quality paper," said Taib. "We expect a positive response from investors."
The Rocky Hill-based authority in 2013 purchased 2,333 mortgages, up 35% from its total the previous year.
"Based on the current economic indications and more recently, the announcement from FHA to reduce annual insurance premium, we believe there is going to be a significant uptick in home sales in 2015 and hence projecting another big year," Taib said.
Last month the Federal Housing Administration said it would reduce the annual premiums new borrowers will pay by half of a percent. FHA projects the move to save more than $2 million homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over three years.
CHFA's current below-market, or 30-year mortgage, interest rate for first-time homebuyers ranges from 2.75% to 3.5%.
Moody's Investors Service and Standard & Poor's assign triple-A ratings to CHFA, both with stable outlooks.
"The rating is based on the very high overcollateralization of assets to liabilities, very strong program cash flows, a high percentage of government-insured loans and support from the state through the housing mortgage capital reserve fund," said Moody's.
The state legislature created the authority in 1969.